Cease, desist order issued for Maui mortgage broker

May 18, 2013

The state Department of Commerce and Consumer Affairs' Division of Financial Institutions has issued a cease-and-desist order against Kathleen Patricia Morris, also known as Tricia Morris, and her once-prominent Maui mortgage brokerage.

Commissioner of Financial Institutions Iris Ikeda-Catalani ordered Morris and Herman-Morris Enterprises Inc., doing business as Hawaii's Premiere Mortgage Co., to stop operating as a mortgage loan originator and a mortgage loan originator company on suspicion of violating Hawaii law.

The division alleges that Morris and her company were:

* Originating a mortgage loan in a consumer's name without his or her authorization.

* Receiving payoffs of mortgage loans and not remitting the payoff amounts to the lenders.

* Attempting to solicit a complainant with a payment to withdraw his complaint against the licensees.

* Using a trade name without properly notifying the commissioner of financial institutions of the name.

* Failing to update the financial disclosure pursuant to changes in financial status.

* Failing to notify the commissioner about a revocation of a previous license.

An administrative hearing on the immediate temporary cease-and-desist order will be held on May 29 on Oahu.

In March, a U.S. bankruptcy judge ruled that Morris and husband/business partner David Duffy Herman could not file for bankruptcy protection against current and possible future debts arising from a case already heard by the court. The ruling cleared the way for creditors to pursue debts owed by Morris and Herman, owners of Hawaii's Premiere Mortgage Co. in Kihei.

The couple disclosed in court records that they had from 100 to 199 creditors who were owned from $1 million to $10 million.

Morris could not immediately be reached for comment Friday. A message left on her voicemail went unanswered.

The couple has said in court filings that their "finances suffered" after Herman suffered a heart attack in Idaho in 2009. The filings said Morris tried to reorganize their debt and obtain hardship loan modifications.

In January, the couple's Chapter 11 bankruptcy case was dismissed.

In a written statement to The Maui News earlier this year, Morris and Herman said they intended to repay as many people as they could and would use revenue from their various businesses, including their mortgage business.

Morris and Herman were listed as the fee owners of more than a dozen Maui properties with combined assessed tax value of more than $14.5 million, according to Maui County property tax records.

In court documents, an acting U.S. trustee said the debtors had "demonstrated gross mismanagement of their estates" and did not provide information "reasonably requested by the U.S. Trustee."